Chapter 2 lays out the conditions under which a single jurisdiction exerts global regulatory authority and shows why the EU today is in a unique position to assume the role of a global regulatory hegemon. These conditions explain the emergence and prevalence of the Brussels Effect. A country’s market size is a well-understood proxy for its ability to exercise regulatory authority over foreign corporations and individuals. But market size alone does not guarantee global regulatory influence. The state must also have the regulatory capacity as well as the political will to generate stringent rules. Moreover, the Brussels Effect only occurs when the EU regulates inelastic targets, such as consumer markets as opposed to capital. Unlike capital, consumers are not able to flee to less regulated jurisdictions, compromising the EU’s regulatory clout. Finally, EU standards become global only when companies’ production or conduct is non-divisible—in other words, when a company’s benefits of adhering to a single standard exceed the benefits of taking advantage of laxer standards in other markets. These conditions, taken together, explain why the EU is the only regulatory regime that can wield unilateral regulatory influence across global markets today.
Competition laws have become a mainstay of regulation in market economies today. At the same time, past efforts to study the drivers or effects of these laws have been hampered by the lack of systematic measures of these laws across a wide range of years or countries. In this paper, we draw on new data on the evolution of competition laws to create a novel Competition Law Index (the "CLI") that measures the stringency of competition regulation from 1889 to 2010. We then employ the CLI to examine trends in the intensity of competition regulation over time and across key countries. We also use our data to create several alternative indexes of competition law that may be appropriate for specific research applications. In doing so, we hope to demonstrate how the CLI can facilitate new empirical research on comparative and international competition law.
The Brussels Effect challenges the prevalent view that the European Union (EU) is a declining world power. It argues that notwithstanding its many obvious challenges, the EU remains an influential superpower that shapes the world in its image through a phenomenon called the “Brussels Effect.” The Brussels Effect refers to the EU’s unilateral power to regulate global markets. Without the need to resort to international institutions or seek other nations’ cooperation, the EU has the unique ability among nations today to promulgate regulations that shape the global business environment, elevating standards worldwide and leading to a notable Europeanization of many important aspects of global commerce. Different from many other forms of global influence, the Brussels Effect entails that the EU does not need to impose its standards coercively on anyone—market forces alone are often sufficient to convert the EU standard into the global standard as multinational companies voluntarily extend the EU rule to govern their global operations. In this way, the EU wields significant, unique, and highly penetrating power to unilaterally transform global markets, including through its ability to set the standards in diverse areas such as competition regulation, data protection, online hate speech, consumer health and safety, or environmental protection.
Competition law has proliferated around the world. Due to data limitations, however, there is little systematic information about the substance and enforcement of these laws. In this article, we address that problem by introducing two new datasets on competition law regimes around the world. First, we introduce the Comparative Competition Law Dataset, which codes competition laws in 131 jurisdictions between 1889 to 2010. Second, we introduce the Comparative Competition Enforcement Dataset, which provides data on competition agencies’ resources and activities in 100 jurisdictions between 1990 and 2010. These datasets offer the most comprehensive picture of competition law yet assembled and provide a new foundation for empirical research on the legal regimes used to regulate markets.
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